Can an operator steal my minerals?
An operator cannot steal your minerals, but can steal your mineral resource, meaning an operator can exploit your minerals without your consent. This process is called "forced pooling". There are several steps that the operator must take to force pool you: - Offer you a fair mineral lease. - Send you AFE (Affidavit for Expenditure) for the wells to be drilled over your minerals. - Set up a force pooling hearing with the oil & gas commission of the state. - Drill the wells. Most mineral owners think that their mineral resources cannot be taken without their consent and throw away the letters and notices from operators. In terms of negotiation, when you are receiving notices from operators, this is when your minerals likely have the highest value. The best way to get the most money for your mineral rights is to enter into a competitive marketplace, such as LandGate.
I have been force pooled, now what?
Depending on the rules of the oil & gas commission of the state, you can still get a good deal for the lease or sale of your minerals even after you have been forced pooled by the operator. It gets more complicated, but for the best deal we recommend you contact us before the wells start producing.
The entirety of your minerals doesn’t get force pooled, but your mineral resources get force pooled well by well. Most of the time, an operator will permit several wells and force pool you for all these wells. Yet until the well is producing, we can help you get a good deal for a lease or sale of your minerals. If a well has started producing, you might have lost some value for that well, but you can still see a return on the remaining wells that are left to be drilled if you act quickly. We have helped numerous mineral owners in your situation.
Remember to research the forced pooling laws by state. Again, depending on the rules of the oil & gas commission, you might still get a default royalty from the operator. However, it won’t be the best royalty percentage and you would have missed a lease bonus payment.
I’m being threatened with “forced pooling” on my minerals. What does that mean and how can I stop it?
Forced Pooling (sometimes called Statutory or Compulsory Pooling) is a legal mechanism that allows operators to drill wells when they are unable to get 100% of the mineral interest owners to commit to support the drilling of a well.
In terms of negotiation, when you are receiving force pooling notices, even after a hearing, this is when your minerals likely have the highest value. Forced pooling is NOT in the best interest of the mineral owner. If you've received communication threatening forced pooling, seek help right away.
I received invoices from an Energy Company. What should I do?
An AFE (Authorization for Expenditure) is a bill for the oil well(s) to be drilled. Since you haven’t leased (yet) and are currently considered a non-operating partner, the Operator sends an invoice for your cost share of these wells. The cost share is determined by your working interest in the wells, which is calculated using your gross acreage, mineral interest, and the size of the Drilling Spacing Unit of the wells to be drilled. An AFE is an estimate of cost, the actual cost to be paid will be known later. Do not panic, but act quickly! In terms of negotiation, when you are receiving several operator notices, especially these invoices, this is when your minerals likely have the highest value. Find your minerals on LandGate's map to get your free Property Report with mineral rights lease and sale estimates today!